By now, radio stations are playing holiday music 24 hours a day. Some stations even began playing holiday tunes before Halloween. For some business owners, this is when their business blossoms. Black Friday is just that: the day that the business covers all expenses for the year and makes money.
However, for some business owners, the message behind the song “The Most Wonderful Time of the Year” may not hold true. In fact, for some, this is the most dreaded time of the year. Year-end parties, preparation for holiday business shutdowns, and trying to close out the business year (especially for those on calendar-year accounting systems) can generate a lot of stress. The following are some preparation suggestions for small-business owners that may help to bring more joy to this time of the year.
Thanking your customers – Prepare and start early. Thanksgiving is a great time to reflect on the year and show your appreciation to your customers, particularly those who have been loyal throughout the year. Consider how you want to convey your appreciation. I’ve found that a heartfelt letter or personalized card specifically thanking customers for their business goes a long way. Some people like to send “swag” like coffee mugs, pens, portfolios, etc. to their best customers. I’ve found a personal message to be much more effective. Begin sending messages to your customers early.
Taking care of employees – Year end is a great time for holiday lunches and parties to show employee appreciation. Year-end bonuses to share profits from a good year are also a welcome surprise. At KTM Solutions, depending on work load and schedules, as an additional way to show appreciation, we will close the office between Christmas and New Years and provide those days as additional paid holidays. In all of these scenarios, pre-planning is a must for both the employee and the business.
Letting employees know early about planned shutdowns allows them to plan their holidays and any holiday travel. Forethought to plan and schedule gatherings allows more employees to participate and ensures a more relaxed time for those doing the planning.
Preparing your business for year end – Quite honestly, preparing your business for year-end can be the most time consuming and stressful part of closing out the current year and initiating the New Year. In addition to making sure customers and employees are appreciated, actions taken in the last weeks up to December 31 can have a significant impact on your business. These actions include:
- Completing year-end deliveries – Some contracts and customers require that deliveries occur before the end of the year. Usually, there are financial reasons to complete deliveries by year end. For customers, budgets may be tied to year-end spending. The customer wants to get the expense on their books before the end of the tax year.
- Large OEM planned shutdowns – As a supplier that supports large manufacturers, some of our products must be installed during holiday shutdowns. For example, automotive OEM’s change over a lot of their tooling and assembly lines during the Christmas and July 4th shutdowns, leaving a very limited time to install hardware. Delays and/or missing the shutdown window can be catastrophic to your business relationship and costly to your bottom line. Preplanning and solid project management are key.
- Completing year-end purchases and paying bills early – As much as your customers may want to receive products and services before year end (taxes), your business may want to complete purchases before year end to offset income to lower your tax position.
- Receiving payment early – If you had a slow year, you may like to receive payments early in order to protect your tax position in the following year. 2020 and 2021 may have been slow years for your business and may have put you into a position where added income will offset losses in revenue. Early collections usually mean early deliveries. These deliveries need to be planned and negotiated in advance.
- Delaying income – On the other hand, if your business had a great year, you may not want to receive payments before the year end. One way to control receipts is to delay invoicing. Meetings with your tax professional in the early fourth quarter can help you develop an invoicing strategy to your tax advantage.
- Understanding the impact of the holidays on your business – Employees and customers may choose to take extended time off during the holiday season. Understanding planned time off, customer shutdown schedules, and customer business-office challenges early in the fourth quarter can make December a much better month.
- Refine your business plan, including what you will do the first two weeks of January – I will admit, I like spending time with my family over the holidays. I try to pour myself into the experience. If successful, I almost have to remind myself after January 1 where I work! Spend some quality time planning the next business year. Look at your sales goals and infrastructure. Define key targets and opportunities. Consider your key customers and their needs. Consider developmental opportunities for your employees. Discuss these plans with your staff and/or a trusted group of advisors. Also, consider what you will do immediately following the holidays,especially in the first two weeks of the New Year. Put together the plan and have it ready for when you return from the break.
Now that we have nearly 17 years under our belt, KTM Solutions has a solid understanding of the year-end challenges. The stress level in December as we work through year-end closeout has decreased significantly.
Don’t get me wrong, December is still one of our busiest months. But having a good idea of what’s coming, developing a good year-end plan, and starting early has allowed all of us a much more relaxed holiday experience. I believe this translates into a better experience for our customers and employees as well.
On behalf of me and my family, as well as all of the employees of KTM Solutions, we wish you a very Merry Christmas and prosperous New Year.
Paul V. Kumler, P.E., is president and founder of KTM Solutions, an engineering company that services the aerospace and large-scale manufacturing industries. KTM Solutions designs and builds custom machines and “tooling” (jigs, fixtures, below-the-hook lifting systems) supporting a broad clientele and various industries. (www.ktmsolutions.com) The company is headquartered in Greer, South Carolina, with a remote office in Charleston, South Carolina. Mr. Kumler serves in several volunteer roles including the SC Aerospace Advisory Board. Mr. Kumler, a professional engineer, is licensed in Louisiana, South Carolina, Texas, and Washington. He is married to Ginger A. Kumler. Together, they have two grown children and three grandchildren